March 2007, the month when the world might catch a glimpse of what Big Oil can bring to the Biodiesel
marketplace. Chevron oil has invested what equals 22% of a 10 million biodiesel plant in Galveston, Texas. The Texas soybean biodiesel plant is expected to increase production by as much as 10 million gallons per year, an increase in production of at least 50%.

The plant, which currently produces 20 million gallons a year of bio-diesel fuel made from soybean oil, is among the largest of its kind in the nation and thanks to the Chevron Corp., a San Ramon, Calif.-based oil giant, is planned to grow larger and produce even more of the environmentally friendly fuel. The production process at the Galveston, Texas facility includes chemically treating the soybean oil in order to extract 'esters'. The esters are then processed into Bio-Diesel, a diesel fuel that is virtually indistinguishable from petroleum-based diesel. Chevron recently invested in ethanol gasoline blended fuels but, and will be a "niche sector" for the company, according to a Chevron Company spokesperson.

Galveston, Texas Biodiesel Plant

In January 2007, Chevron announced plans to begin selling corn-based ethanol in California, a state where E85 availability is slowly increasing. With this investment in biodiesel, Chevron is one of the first major U.S. oil companies to move the biofuel from the laboratory into a production facility, a path that biodiesel industry leaders hope its peers will follow.

Chevron's investment into the plant, which is also financed by other institutional and private investors, while impressive, is small when compared to that of setting up an offshore oil platform. Setting up petroleum production, oil rig could run into billions of dollars, yet when compared to money making possibilities, quite worth the cost if you can afford it. The soybean oil project, which resembles a miniature oil refinery, represents a change in the way that at least one of the world's largest energy firms thinks when it comes to doing the right thing.

Recent business trends in the automotive fuel industry are beginning to show that the increasing demand for energy is likely to overtake current fuel production processes. According to Rick Zalesky, Vice President - Chevron Biofuels and Hydrogen, Oil and Gas will continue to be major Renewable Energy Sources but, those alone, will not be enough. These projects will allow Chevron to gain experience producing biofuels on a broad scale. In turn, it is hoped that the company will share technology and refining tops with an infant industry which is still struggling with quality issues.

U.S. biodiesel production more than doubled in 2006 increasing to more than 220 million gallons. The industry's' goal is to replace 5 percent of the country's petroleum diesel for on-road uses by 2015 equals about 2 billion gallons. In order to reach goals like this, the industry will have to rely on breakthroughs in crop research such as btcorn, and improved farming techniques. It will also need to use the nation's oil and gas infrastructure to blend, transport and avail the fuel for widespread use.

A Bio-Solution

BioDiesel has been around for decades, but has only recently enjoyed promotion as a way to reduce America's dependence on foreign oil, help U.S. farmers and address climate-changing pollutants from pure fossil fuel. BioDiesel is available in varying blends such as B20, B90, and B100.
Naysayer's cast doubts that alternative fuels will require too many years until it can replace more than a small fraction of U.S. fuel consumption. Energy companies are placing small bets on biofuels and some retail distributors are offering E85
at a lower price than unleaded gasoline. Houston's Marathon Oil, Maple
Cos. and Brazil's state-owned oil company Petrobras are investing in ethanol plants, while BP is partnering with chemical giant DuPont to further develop biofuels. Some others such as Exxon
Mobil are funding research through universities.
The financial group behind the ethanol plant is already laying plans to expand the facility. According to Bill Spence, President and CEO of BioSelect Fuels, (the Houston company that will operate the facility), the plant is expected to be able to produce 60 million gallons of biodiesel a year by the end of 2007. Expectations have been set to produce 110 million gallons a year by early 2009.
Cheaper Fuel Stock
But to be successful long-term, Spence said, it is crucial that the plant migrate
from making biodiesel from food crops such as soybean and palm oil, which are
expensive and contain a low oil content, to nonfood crops with higher energy
potential that are cheaper to buy, such as castor beans or Chinese tallow trees
which are plentiful in Southeast Texas The BioDiesel industry as a whole is
hopeful that Texas Environmental Regulators will not ban
the selling of biodiesel in more than 100 Texas counties. In 2006, state
officials nearly banned biodiesel from being sold in areas of Southeast Texas.
TCEQ has noted that conflicting information exists when it comes to whether or
not biodiesel produces more of a (NOx) nitrogen oxide than petroleum diesel.
To that end,TCEQ has given the industry until the end of 2007 to make its case.